Glenn Bozarth, a spokesman at Mattel's headquarters in El Segundo, Calif., said the company will keep some of Tyco's 350 employees in Mount Laurel, but has not decided how many.
Tyco was founded in South Jersey in the 1920s and began to specialize in electric model trains and boys' toys and cars.
In the 1980s, it broadened its lines to include dolls, games, and preschool toys under the Sesame Street label. It also expanded internationally.
But in the 1990s those efforts ran into trouble, and Tyco has lost $138 million in the last four years.
Jill S. Krutick, a toy analyst with Smith Barney in New York, said Tyco depended too much on single-hit toys, such as its Ariel doll, and failed to develop a strong core of brands.
``Tyco's fall through the years was a function of a product line that was too rooted on promotional success and less on evergreen core products,'' she said.
However, the company is going out with a winner: Tickle Me Elmo, the smash-hit of last Christmas, is a Tyco toy.
Tyco is the nation's third largest toy company, with 2,200 employees worldwide and sales of $721 million in 1996.
Mattel, the nation's largest toy company, makes Barbie, Hot Wheels, Fisher-Price and Disney toys. It has 2,000 employees at its headquarters and 26,000 worldwide. Last year, its sales were more than $3.8 billion.
``The merger of these two companies will be an excellent strategic fit that will maximize the value of some of the world's greatest toy brands,'' said Jill E. Barad, Mattel's president and chief executive officer.
Shareholders of Tyco common stock will receive Mattel stock equivalent to $12.50 for each Tyco share. Much of the company's stock is now held by professional securities traders.
Tyco closed up 38 cents at $12 yesterday. Mattel gained 25 cents, closing at $24.50.
Mattel said it plans to pare its product line to concentrate on its strengths, but did not identify any lines it expects to sell or discontinue.
Krutick said Tyco's lines have already been ``combed through'' and will probably remain in Mattel's fold. She said Mattel is more likely to discontinue products it took on through recent acquisitions.
She said the merger and Mattel's latest restructuring are another chapter in the industry's growing move toward consolidation to drive down prices and build market strength.
``Clearly these are painful moves in the increasingly competitive toy world. The toy industry is as competitive as ever, making it difficult sometimes,'' she said.
Employees leaving for lunch yesterday from the Tyco headquarters - at six stories, the tallest building in the sprawling Mount Laurel Corporate Center - said they hadn't been told anything about layoffs.
``We're all just waiting to see what happens,'' said assistant manager Kara McKiernean.
Bozarth, the Mattel spokesman, said the company has not decided which employees will lose their jobs. He said they will begin to be notified in the next few weeks, and the bulk of the layoffs will come in the next few months.
Some workers said the atmosphere in Tyco's offices hadn't changed much since the November merger announcement. Others said word of the FTC approval increased tension yesterday.
Employees said many coworkers have left Tyco in the last few months and more are looking to leave.
Mattel said it would take a one-time, pretax charge of approximately $275 million in the first quarter. About $175 million of the charge is related to the Tyco acquisition and $100 million to restructuring within Mattel.
The companies announced the merger in November, but in late December the Federal Trade Commission asked for additional information about whether the combination would create antitrust problems.
The FTC had until yesterday to object, which it did not. An FTC spokeswoman yesterday said the agency does not comment on its reviews.